hstm20250107

hstm20250107_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2025

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No.: 000-27701

HealthStream, Inc.

(Exact name of registrant as specified in its charter)

Tennessee	62-1443555
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 11th Avenue North, Suite 850,
Nashville, Tennessee	37203
(Address of principal executive offices)	(Zip Code)

(615) 301-3100

(Registrant's telephone number, including area code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (Par Value $0.00)	HSTM	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2025, there were 30,525,266 shares of the registrant’s common stock outstanding.

		Page Number
Part I.	Financial Information	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited) – March 31, 2025 and December 31, 2024	1
	Condensed Consolidated Statements of Income (Unaudited) – Three Months ended March 31, 2025 and 2024	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Three Months ended March 31, 2025 and 2024	3
	Condensed Consolidated Statement of Shareholders' Equity (Unaudited) – Three Months ended March 31, 2025 and 2024	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Three Months ended March 31, 2025 and 2024	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
Part II.	Other Information	18
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
	SIGNATURE	20

	*March 31,*			*December 31,*
	*2025*			*2024*
ASSETS
Current assets:
Cash and cash equivalents	$	77,289		$	59,469
Marketable securities		36,030			37,748
Accounts receivable, net		30,849			30,189
Accounts receivable - unbilled		5,238			5,133
Prepaid and other current assets		20,312			20,583
Total current assets		169,718			153,122

Property and equipment, net		10,696			10,741
Capitalized software development, net		44,042			43,370
Operating lease right of use assets, net		16,846			17,453
Goodwill		191,245			191,220
Intangibles, net		52,116			55,548
Other assets		39,373			39,312
Total assets	$	524,036		$	510,766

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,177		$	6,628
Accrued royalties		5,615			5,190
Accrued liabilities		10,355			10,141
Accrued compensation		4,705			9,507
Deferred revenue		102,009			84,227
Total current liabilities		125,861			115,693

Deferred tax liabilities		15,352			14,596
Deferred revenue, noncurrent		1,330			1,655
Operating lease liability, noncurrent		16,640			17,366
Other long-term liabilities		2,045			2,101
Commitments and contingencies

Shareholders’ equity:
Preferred Stock, no par value, 10,000 shares authorized, no shares issued or outstanding		—			—
Common stock, no par value, 75,000 shares authorized; 30,525 and 30,432 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		252,466			252,432
Retained earnings		112,361			108,972
Accumulated other comprehensive loss		(2,019	)		(2,049	)
Total shareholders’ equity		362,808			359,355
Total liabilities and shareholders’ equity	$	524,036		$	510,766

	*Three Months Ended*
	*March 31, 2025*			*March 31, 2024*
Revenues, net	$	73,485		$	72,760
Operating costs and expenses:
Cost of revenues (excluding depreciation and amortization)		25,487			24,617
Product development		12,047			12,032
Sales and marketing		12,149			11,773
General and administrative		8,669			8,312
Depreciation and amortization		10,755			10,336
Total operating costs and expenses		69,107			67,070

Operating income		4,378			5,690

Interest income		931			904
Other expense, net		(61	)		(51	)

Income before income tax provision		5,248			6,543
Income tax provision		916			1,316
Net income	$	4,332		$	5,227

Net income per share:
Basic	$	0.14		$	0.17
Diluted	$	0.14		$	0.17

Weighted average shares of common stock outstanding:
Basic		30,444			30,313
Diluted		30,587			30,418
Dividends declared per share	$	0.031		$	0.028

	*Three Months Ended March 31, 2025*
	*Common Stock*					*Retained*			*Accumulated Other Comprehensive*			*Total Shareholders’*
	*Shares*		*Amount*			*Earnings*			*(Loss)/Income*			*Equity*
Balance at December 31, 2024		30,432	$	252,432		$	108,972		$	(2,049	)	$	359,355
Net income		—		—			4,332			—			4,332
Comprehensive income		—		—			—			30			30
Dividends declared on common stock ($0.031 per share)		—		—			(943	)		—			(943	)
Stock-based compensation		—		1,104			—			—			1,104
Common stock issued under stock plans, net of shares withheld for employee taxes		93		(1,070	)		—			—			(1,070	)
Balance at March 31, 2025		30,525	$	252,466		$	112,361		$	(2,019	)	$	362,808

	*Three Months Ended March 31, 2024*
	*Common Stock*					*Retained*			*Accumulated Other Comprehensive*			*Total Shareholders’*
	*Shares*		*Amount*			*Earnings*			*Loss*			*Equity*
Balance at December 31, 2023		30,298	$	249,075		$	92,368		$	(691	)	$	340,752
Net income		—		—			5,227			—			5,227
Comprehensive loss		—		—			—			(481	)		(481	)
Dividends declared on common stock ($0.028 per share)		—		—			(849	)		—			(849	)
Stock-based compensation		—		1,060			—			—			1,060
Common stock issued under stock plans, net of shares withheld for employee taxes		100		(855	)		—			—			(855	)
Balance at March 31, 2024		30,398	$	249,280		$	96,746		$	(1,172	)	$	344,854

	Three Months Ended March 31,
	2025			2024
OPERATING ACTIVITIES:
Net income	$	4,332		$	5,227
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,755			10,336
Stock-based compensation		1,104			1,060
Amortization of deferred commissions		3,150			2,957
Provision for credit losses		237			174
Deferred income taxes		751			771
Loss on equity method investments		72			31
Other		(399	)		(346	)
Changes in operating assets and liabilities:
Accounts and unbilled receivables		(1,001	)		(5,782	)
Prepaid and other current assets		268			201
Other assets		(2,781	)		(1,984	)
Accounts payable and accrued expenses		(7,296	)		(7,416	)
Accrued royalties		425			1,157
Deferred revenue		17,457			14,552
Net cash provided by operating activities		27,074			20,938

INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities		11,268			14,000
Purchases of marketable securities		(9,171	)		(14,124	)
Proceeds from sale of non-marketable equity investments		—			765
Purchase of other investments		(500	)		—
Payments associated with capitalized software development		(7,790	)		(7,019	)
Purchases of property and equipment		(1,055	)		(742	)
Net cash used in investing activities		(7,248	)		(7,120	)

FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards		(1,070	)		(855	)
Payment of cash dividends		(943	)		(849	)
Net cash used in financing activities		(2,013	)		(1,704	)

Effect of exchange rate changes on cash and cash equivalents		7			(40	)
Net increase in cash and cash equivalents		17,820			12,074
Cash and cash equivalents at beginning of period		59,469			40,333
Cash and cash equivalents at end of period	$	77,289		$	52,407

NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment, accrued but not paid	$	197		$	33
Capitalized software development, accrued but not paid	$	330		$	395
Fair value of common stock issued as consideration for business combinations	$	—		$	—

	*Three Months Ended March 31,*
	*2025*		*2024*
Subscription services	$	70,789	$	70,205
Professional services		2,696		2,555
Total revenues, net	$	73,485	$	72,760

Dividend Payment Date		Dividend Declaration Date		Dividend Per Share			Record Date		Cash Outlay
March 21, 2025		February 24, 2025		$	0.031		March 10, 2025		$	943

			*Weighted-*
	*Common*		*Average*		*Aggregate*
	*Shares*		*Exercise Price*		*Intrinsic Value*
Outstanding at beginning of period		90	$	20.34
Granted		—		—
Exercised		—		—
Expired		—		—
Forfeited		—		—
Outstanding at end of period		90	$	20.34	$	1,066
Exercisable at end of period		90	$	20.34	$	1,066

				*Weighted-*
	*Number of*			*Average Grant Date*		*Aggregate*
	*RSU’s*			*Fair Value*		*Intrinsic Value*
Outstanding at beginning of period		571		$	24.54
Granted		87			32.55
Vested		(127	)		22.93
Forfeited		(53	)		25.35
Outstanding at end of period		478		$	26.35	$	15,380

	*March 31, 2025*
	*Adjusted Cost*		*Unrealized Gains*		*Unrealized Losses*			*Fair Value*
Level 2:
U.S. treasury securities	$	36,028	$	5	$	(3	)	$	36,030
Total	$	36,028	$	5	$	(3	)	$	36,030

	*December 31, 2024*
	*Adjusted Cost*		*Unrealized Gains*		*Unrealized Losses*			*Fair Value*
Level 2:
U.S. treasury securities	$	37,726	$	24	$	(2	)	$	37,748
Total	$	37,726	$	24	$	(2	)	$	37,748

10.1^	HealthStream, Inc. 2025 Cash Incentive Bonus Plan
31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1 INS	Inline XBRL Instance Document – The instant document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.1 SCH	Inline XBRL Taxonomy Extension Schema
101.1 CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.1 DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.1 LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.1 PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, has been formatted in Inline XBRL
^	Management contract or compensatory plan or arrangement

	HEALTHSTREAM, INC.

May 9, 2025	By:	/s/ Scott A. Roberts
		Scott A. Roberts
		Chief Financial Officer

SEC Form 10-Q filed by HealthStream Inc.